Stockton, who joined Mattel three years ago and has overseen collapsing sales over the last five quarters, is leaving the company with immediate effect. He was not quoted in the firm’s announcement.

Mattel has been struggling in recent years as the company has failed to quickly adapt to children’s changing demands.

On Monday, Mattel said profits over the last three months of 2014 dropped 59% to $150m. Sales fell 6% to $2bn.

Mattel’s shares were down 3% to $27.17 at 11.30am on Monday.

Stockton has been replaced by Christopher Sinclair as interim chairman and CEO. Sinclair has served on the toy company’s board since 1996.

“Mattel is an exceptional company with a great future but the board believes that it is the right time for new leadership to maximise its potential,” Sinclair said. “We are committed to delivering improved growth and financial performance and remain confident in our ability to leverage our unmatched portfolio of brands, global scale and strong balance sheet as we execute on our strategic plan.

“We will be working during the coming months to revitalize the business and to identify the right leadership for Mattel as it enters its next phase of growth and value creation.”